The shares of India’s largest private sector lender fell 7.5 percent to an intraday low of ₹ 1,553.25 per share after the bank reported muted third-quarter results.
HDFC Bank Ltd is a large-cap stock, with a market capitalization of Rs 11,85,528 crore. At 11:50 a.m., the company shares were quoted at Rs 1,561.45 per share, up 7 percent from the previous close price.
The bank reported a standalone net profit growth of 33% year-on-year (YoY) to ₹16,372 crore in the third quarter of FY24 from ₹ 12,259 crore in the corresponding quarter of the previous year quarter. Similarly, On quarter on a quarter basis, HDFC’s profit has jumped by 2.4 percent from ₹15,976 crore in Q2FY24 to ₹16,372 crore in Q3FY24.
The net interest income (NII) climbed by 23.9% to ₹28,470 crore from ₹22,990 crore in the same quarter of the previous year. The bank’s loans increased by 4% quarter over quarter, while deposits increased by 2%. Its Liquidity Cover Ratio (LCR) dropped to 109.8% from 120% QoQ due to a reduction in liquid assets to support loan growth.
The bank has given slower growth in Savings Account (SA) deposits than Current Account (CA) deposits due to a preference for term deposits over SA deposits, as well as a quicker increase in customer spending than balance accretion.
Net interest income climbed by only 4% from the previous quarter, while the net interest margin was reported 3.4% lower than expected at 3.56%.
The bank’s liquidity in the system has become negative for the first time since 1Q 2020 due to the central bank’s constraints “so we do need deposits to be kicking in for the loans to be operating,” Chief Financial Officer Srinivasan Vaidyanathan said in a call with analysts.
HDFC Bank’s management believes that the deficit in system liquidity is a significant challenge to deposit growth. And predicts that the CASA ratio will improve as consumer spending decreases in future quarters.
The bank’s loan-to-deposit ratio (LDR) increased from 108.4% to 110.5% quarter over quarter. The standalone HDFC Bank’s LDR was 89% in Q3FY24, compared to 85% in Q1FY24.
The bank’s consolidated interest income increased by 42% to ₹78,008 crore in Q3FY24, up from ₹45,002 crore in Q3FY23.
The bank’s gross non-performing assets (NPA) increased to 1.26 percent from 1.23 percent the previous year. The net NPA for the quarter was 0.31 percent, compared to 0.33 percent the previous year.
HDFC Bank opened 146 branches in Q3FY24, taking the total number of branches to 8,091. The bank is planning to open another 570 branches and aims to have a total of 1,000 by the end of fiscal year 24.
The Housing Development Finance Corporation Limited (HDFC) is the largest private sector bank, which provides a range of banking and financial services including retail banking, wholesale banking, and treasury operations.
HDFC Bank is one of India’s leading private banks and was among the first to receive approval from the Reserve Bank of India (RBI) to set up a private sector bank in 1994.
As per the recent December quarter of shareholding pattern, Foreign institutional investors hold a 52.31 percent stake, while domestic institutional investors hold 30.54 percent and retail investors hold a 16.98 percent stake in the company.
Written by Omkar Chitnis
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